ESCROW AGREEMENT, dated as of June 1, 1990, between ▇▇▇▇▇▇▇ &
Associates, as escrow agent, and International Test Systems Company, as the
issuer.
PRELIMINARY STATEMENT
The Company is making a public offering of its common stock and
warrants pursuant to a registration statement on Form SB-2 filed with the
Securities and Exchange Commission. The Company wishes the Escrow Agent to act
as escrow agent and the Escrow Agent wishes so to act in connection with the
Offering, on the terms and conditions set forth below.
Accordingly, the parties hereto agree as follows:
1. Definitions.
The following capitalized terms have the indicated meanings when used
in this agreement.
"Business Day" shall mean a day on which banks in the City of New York
are not authorized to close.
"Company" shall mean International Test Systems, a Delaware
corporation.
"Escrow Account" shall mean the Escrow Account designated by ▇▇▇▇▇▇▇ &
Associates at Chittenden Bank in Manchester, Vermont.
"Escrow Agent" shall mean ▇▇▇▇▇▇▇ & Associates, in its capacity as
escrow agent hereunder.
"Escrow Interest Share" shall mean, with respect to any subscriber,
such subscriber's pro rata share of the excess, if any, of (a) the
total interest earned on funds held in the Escrow Accounts and invested
by the Escrow Agent in accordance with section 6 hereof less (b) all
amounts of compensation and reimbursement which the Escrow Agent is
entitled to receive in accordance with section 9 hereof. A subscriber's
pro rata share, as that term is used in the preceding sentence, shall
be based on the proportion of the total interest earned on funds held
in the Escrow Accounts represented by the interest earned on funds
deposited in the Escrow Accounts on behalf of such subscriber.
"Offering" shall mean the offering by the Company of the Common Stock
and Warrants.
"Offering Termination Date" shall mean the earlier of (1) the date of
acceptance of subscriptions for $750,000 in common stock and warrants, (2) such
earlier date as may be determined by the Company and (3) one year after the
effective date of the offering or, if the Company determine to extend the
Offering to a date not later than two years after effectiveness.
2. Appointment of the Escrow Agent. The Company hereby appoints the Escrow
Agent as escrow agent, and the Escrow Agent hereby accepts such
appointment, in accordance with the terms and conditions set forth herein.
3. Deposit of funds into the Escrow Accounts.
3.1 The Escrow Agent shall establish an escrow account for the funds
deposited with it by the Escrow Agent pursuant to section 3.2 hereof
3.2 Funds shall be received by the Escrow Agent from checks received by
the Escrow Agent or the Company and shall promptly be deposited by the
Escrow Agent in the Escrow Account and held by the Escrow Agent in
escrow in accordance with the terms of this agreement.
3.3 The Escrow Agent shall treat all subscriber information provided to it
by each of the Company as its confidential proprietary information,
and in no event will the Escrow Agent disclose such information other
than as contemplated by this agreement.
4. Collection procedure. If any check deposited for collection is returned
unpaid to the Escrow Agent, the Escrow Agent shall promptly so notify,
and promptly return such check to, the Company.
5. Disbursement of funds from the Escrow Accounts.
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5.1.1 If a subscriber's subscription is rejected by a Placement Agent
and/or the Company in whole or in part, or if all or any portion
of the deposit made on behalf of any subscriber remains on
deposit after the Offering Termination Date, the Company shall
deliver to the Escrow Agent a notice (a "Refund Notice")
identifying such rejected subscriber or the subscriber whose
funds remain on deposit following the Offering Termination Date,
as the case may be. By noon of the Business Day following the
later of the day on which the Escrow Agent has received the
Refund Notice or the day on which such subscriber's funds are
collected by the Escrow Agent, the Escrow Agent shall return such
subscriber's cash deposit, without interest thereon, to the
Company, and shall, as soon as practicable, mail (by first class
mail) to the subscriber at such subscriber's address as furnished
to the Escrow Agent by the Company less any applicable
withholding taxes or fees.
5.1.2 The Company may by notice to the Escrow Agent delivered with the
related Refund Notice provide that an amount equal to the cash
deposits being returned to the Company in accordance with section
7.1.1 hereof shall be netted out of the following day's funds
wired to the Escrow Agent. Any such notice shall include the
information required by section 3.3 hereof with respect to the
subscriber against whose deposit such funds are to be credited.
5.2.1 Prior to each closing of the Minimum Offering Amount which is
$125,000, the Company shall deliver to the Escrow Agent a notice
(a "Closing Notice and Payment Instruction") containing the
following information:
5.2.1.1 with respect to each such subscriber:
(i) the name and address of such subscriber,
(ii) the social security or tax identification number of
such subscriber and,
(iii) the number of securities to be purchased by such
subscriber,
(iv) the amount of funds (including the subscriber's notes)
on deposit with the Escrow Agent to be delivered to the
Company at such closing in payment or partial payment
of the purchase price of such securities.
5.2.1.2 payment instructions (including
amount, payee and method of payment
(i.e., bank cashier's check or wire
transfer)) with respect to all
amounts to be disbursed from escrow
at such closing in respect of
subscriptions, which payment
instructions must include the
written or facsimile signature of an
officer of the Company approving
such payment instructions.
5.2.2 Within one Business Day after receipt of a
Closing Notice and Payment Instruction, the
Escrow Agent shall disburse funds in
accordance with the payment instructions
contained in the Closing Notice and Payment
Instruction provided by the Company.
6. Exculpation and indemnification of the Escrow Agent.
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6.1 The Escrow Agent shall have no duties or responsibilities
other than those expressly set forth herein. The Escrow Agent
shall have no duty to enforce any obligation of any person to
make any payment or delivery, or to direct or cause any
payment or delivery to be made, or to enforce any obligation
of any person to perform any other act. The Escrow Agent shall
be under no liability to the other parties hereto or to anyone
else by reason of any failure on the part of any party hereto
or any maker, guarantor, endorser or other signatory of any
document or any other person to perform such person's
obligations under any such document. Except for amendments to
this agreement referred to below and except for instructions
given to the Escrow Agent by the other parties hereto relating
to the escrow deposits under this agreement, the Escrow Agent
shall not be obligated to recognize any agreement between any
or all of the persons referred to herein, notwithstanding that
references thereto may be made herein and whether or not it
has knowledge thereof.
6.2 The Escrow Agent shall not be liable to the other parties
hereto or to anyone else for any action taken or omitted by
it, or any action suffered by it to be taken or omitted, in
good faith and in the exercise of its own best judgment,
unless such action or omission shall constitute gross
negligence. The Escrow Agent may rely conclusively and shall
be protected in acting upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel
chosen by the Escrow Agent), statement, instrument, report or
other paper or document (not only as to its due execution and
the validity and effectiveness of its provisions, but also as
to the truth and acceptability of any information therein
contained) which is believed by the Escrow Agent to be genuine
and to be signed or presented by the proper person or persons.
The Escrow Agent shall not be bound by any notice or demand,
or any waiver, modification, termination or rescission of this
agreement or any of the terms hereof, unless evidenced by a
writing delivered to the Escrow Agent signed by the proper
party or parties and, if the duties or rights of the Escrow
Agent are affected, unless it shall give its prior written
consent thereto.
6.3 The Escrow Agent shall not be responsible for the sufficiency
or accuracy of the form of, or the execution, validity, value
or genuineness of, any document or property received, held or
delivered by it hereunder, or of any signature or endorsement
thereon, or for any lack of endorsement thereon, or for any
description therein, nor shall the Escrow Agent be responsible
or liable to the other parties hereto or to anyone else in any
respect on account of the identity, authority or rights of the
persons executing or delivering or purporting to execute or
deliver any document or property or this agreement. The Escrow
Agent shall have no responsibility with respect to the use or
application of any funds or other property paid or delivered
by the Escrow Agent pursuant to the provisions hereof. The
Escrow Agent shall not be liable to the other parties hereto
or to anyone else for any loss which may be incurred by reason
of any investment made in accordance with section 6 hereof of
any monies which it holds hereunder.
6.4 To the extent that the Escrow Agent becomes liable for the
payment of withholding taxes in respect of income derived from
the investment of funds held hereunder, the Escrow Agent may
pay such withholding taxes. The Escrow Agent may withhold from
any payment of monies held by it hereunder representing
interest income on funds held in the Escrow Accounts (but not
from payment of any monies held by it hereunder representing
deposits made on behalf of subscribers) such amount as the
Escrow Agent estimates to be sufficient to provide for the
payment of withholding taxes required to be withheld and paid
by it, and may use the sum withheld for that purpose. The
Escrow Agent shall be indemnified and held harmless by the
Company against any liability for taxes and for any penalties
or interest in respect of taxes, on such investment income or
payments in the manner provided in section 8.5 hereof. The
Escrow Agent shall keep adequate records of all amounts so
withheld and paid as withholding taxes and shall report such
information to the Placement Agents and the affected
subscribers.
6.5 The Escrow Agent shall be indemnified and held harmless by the
Company from and against any and all expenses, including
counsel fees and disbursements, or loss suffered by the Escrow
Agent in connection with any action, suit or other proceeding
involving any claim, or in connection with any claim or
demand, which in any way, directly or indirectly, arises out
of or relates to this agreement, the services of the Escrow
Agent hereunder, the monies or other property held by it
hereunder or any income earned from investment of such monies.
Promptly after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action, suit or
proceeding, the Escrow Agent shall, if a claim in respect
thereof is to be made against the Company, notify the Company
thereof in writing; but the failure by the Escrow Agent to
give such notice shall not relieve the Company from any
liability which such party may have to the Escrow Agent
hereunder to the extent that the position of the Company is
not materially prejudiced thereby. Under no circumstances may
the Escrow Agent retain or hold for any time in a manner
inconsistent with the requirements of section 7 hereof any
amount of monies or property to indemnify itself for any such
loss or expense. For the purposes hereof, the term "expense or
loss" shall include all amounts paid or payable to satisfy any
claim, demand or liability, or in settlement of any claim,
demand, action, suit or proceeding settled with the express
written consent of the Escrow Agent and the Company, and all
costs and expenses, including, but not limited to, counsel
fees and disbursements, paid or incurred in investigating or
defending against any such claim, demand, action, suit or
proceeding.
7. Compensation of the Escrow Agent.
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7.1 The Escrow Agent shall be entitled to compensation in the
amount of $2,500 for services rendered by it hereunder.n The
Escrow Agent shall also be entitled to reimbursement for all
reasonable expenses paid or incurred by it in the
administration of its duties hereunder, including, but not
limited to, all reasonable counsel, advisors' and agents' fees
and disbursements.
7.2 All amounts to which the Escrow Agent shall be entitled under
section 9.1 hereof as compensation or reimbursement shall be
paid first out of funds on deposit in the Escrow Accounts and
then, to the extent any such amounts are unpaid after
application of all such interest income, by the Company. The
Escrow Agent shall be entitled to pay to itself out of such
funds on the date the Minimum Offering Amount is received.
Concurrently with making such payment, the Escrow Agent shall
provide each of the Company with a statement showing such
expenses and the calculation thereof in reasonable detail.
8. Further assurances. From time to time on and after the date hereof, the
other parties hereto shall deliver or cause to be delivered to the
Escrow Agent such further documents and instruments and shall do and
cause to be done such further acts as the Escrow Agent shall reasonably
request (it being understood that the Escrow Agent shall have no
obligation to make any such request) to carry out more effectively the
provisions and purposes of this agreement, to evidence compliance
herewith or to assure itself that it is protected in acting hereunder.
9. Termination of agreement and resignation of the Escrow Agent.
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9.1 The agency established by this agreement shall terminate on
the final disposition in accordance with this agreement of the
monies and property held in escrow hereunder, provided that
the rights and obligations of the Escrow Agent and each of the
Placement Agents and the Company under sections 8, 9, 10 and
12 hereof shall survive the termination of such agency.
9.2 The Escrow Agent may resign at any time and be discharged from
its duties as Escrow Agent hereunder by giving the other
parties hereto at least 30 days' notice thereof. As soon as
practicable after its resignation, the Escrow Agent shall turn
over to a successor Escrow Agent appointed by the Placement
Agents all monies and property held hereunder (less such
amount as the agent is entitled to retain pursuant to section
9.2 hereof) upon presentation of the document appointing the
new Escrow Agent and its acceptance thereof. If no new agent
is so appointed within the 60-day period following such notice
of resignation, the Escrow Agent may deposit the aforesaid
monies and property with any court it deems appropriate.
10. Consents to jurisdiction and service of process. Each of the parties hereto
hereby irrevocably consents to the jurisdiction of the courts of the State
of New York and of any Federal court located in such State in connection
with any action, suit or other proceeding arising out of or relating to
this agreement or any action taken or omitted hereunder, and waives
personal service of any summons, complaint or other process and agrees that
the service thereof may be made by certified or registered mail directed to
such person at such person's address for purposes of notices hereunder.
Should the person so served fail to appear or answer within the time
prescribed by law, that person shall be deemed in default and judgment may
be entered by the Escrow Agent against that person for the amount or other
relief as demanded in any summons, complaint or other process so served.
11. Notices. All notices, requests, demands and other communications provided
for herein shall be in writing, shall be delivered by hand or by
first-class mail, shall be deemed given when received and shall be
addressed to the parties hereto at their respective addresses listed below
or to such other persons or addresses as the relevant party shall designate
as to itself from time to time in writing delivered in like manner:
if to: ▇▇▇▇▇▇▇ & Associates,
to it at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
Fax- ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
if to: the Company, to it at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇ Birmingham
12. Miscellaneous.
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12.1 All amounts referred to herein are expressed in United States
Dollars and all payments by the Escrow Agent shall be made in
such dollars.
12.2 If for any reason the escrow deposit is not received by the
Escrow Agent as contemplated herein, the Company shall
reimburse the Escrow Agent for all reasonable expenses,
including reasonable counsel fees and disbursements, paid or
incurred by it in making preparations for providing the
services contemplated hereby.
12.3 This agreement shall be construed without regard to any
presumption or other rule requiring construction against the
party causing such instrument to be drafted. The terms
"hereby", "hereof", "hereto", "hereunder" and any similar
terms, as used in this agreement, refer to this agreement in
its entirety and not only to the particular portion of this
agreement where the term is used. The word "person" shall mean
any natural person, partnership, corporation, government and
any other form of business or legal entity. All words or terms
used in this agreement, regardless of the number or gender in
which they are used, shall be deemed to include any other
number and any other gender as the context may require. This
agreement shall not be admissible in evidence to construe the
provisions of any prior agreement. The rule of ejusdem generis
shall not be applicable herein to limit a general statement,
which is followed by or referable to an enumeration of
specific matters, to matters similar to the matters
specifically mentioned.
12.4 This agreement and the rights and obligations hereunder of any
party hereto may be assigned by such party only to a successor
to such party's entire business. This agreement shall be
binding upon and inure to the benefit of each party's
respective successors and permitted assigns. No other person
shall acquire or have any rights under or by virtue of this
agreement. This agreement may not be changed orally or
modified, amended or supplemented without an express written
agreement executed by the Escrow Agent and the other parties
hereto. This agreement is intended to be for the sole benefit
of the parties hereto, and (subject to the provisions of this
section 14.4) their respective successors and assigns, and
none of the provisions of this agreement is intended to be,
nor shall any such provision be construed to be, for the
benefit of any third person.
12.5 This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
The representations and warranties contained in this agreement
shall survive the execution and delivery hereof and any
investigation made by any party. The headings in this
agreement are for purposes of reference only and shall not
limit or otherwise affect any of the terms hereof.
12.6 This agreement may be executed in several counterparts. Each
counterpart, when so executed and delivered, shall constitute
an original instrument.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
▇▇▇▇▇▇▇ & Associates
By:_____________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
International Test Systems
By:_____________________
▇▇▇▇▇ Birmingham